Bitten by Reality, Apple Saves Its Skin

They believe in Apple computers with near religious fervor. And thousands of the faithful jammed into tiny seats here in Boston to witness the gospel according to Jobs - Steve Jobs, the co-founder of Apple Computer. He would, they hoped, deliver an inspirational strategy.

Apple now sells less than 3 percent of new personal computers, down from 10 percent a year ago.

The deal with Microsoft is intended to clip that downward spiral.

It also assures Macintosh buyers of up-to-date, basic programs for at least the next five years.

"I think this is a very good thing, Sandy D'Arcy, a high-tech consultant in California, says of the alliance. "I think Apple has needed to start reaching out from within its own circle and out to a much larger base. Everyone needs Apple to stay alive."

Nonetheless, the deal was difficult for many to swallow.

After Jobs made the announcement, a giant, live video image of Mr. Gates appeared on an overhead screen. The size of his image, rising to the rafters, seemed symbolic of his influence. Even the remote presence of Gates at a Macworld Expo was too much for many. The audience let go with hisses and boos, drowning out the first few sentences of his speech.

But Gates had nothing but praise for Apple.

"We think Apple makes a huge contribution in the computer industry," Gates said, noting that his company already has 8 million customers using Macintoshes.

Microsoft and Apple set aside their long-running dispute on patent infringement stemming from the introduction of Microsoft's Windows operating system, which allegedly copies many of the features once unique to Apple's Macintosh.

In addition to the Microsoft partnership, Jobs announced a new, more activist and software-savvy board at Apple, which includes Jobs and his long-time friend, Oracle CEO Larry Ellison. The old board had been widely criticized for providing little direction in troubled times.

The new board has not named a chairman, and tellingly Jobs says it won't until a new CEO is chosen. Jobs himself has been widely rumored to fill that position, but has not expressed an interest in taking it.